An FHA appraiser can only require repairs that protect safety, security, soundness, the health of the people living there, or the home’s continued marketability. Cosmetic and minor defects are explicitly not required — and the handbook names them: missing handrails that aren’t a safety threat, holes in window screens, cracked window glass, interior paint in a post-1978 house, a dripping faucet.
What the handbook says
Two short passages carry it. HUD Handbook 4000.1, section II.D.3.n.i, Limited Required Repairs, holds the appraiser to repairs necessary to:
maintain the safety, security and soundness of the Property; preserve the continued marketability of the Property; and protect the health and safety of the occupants.
The section immediately after it, II.D.3.n.ii, As-Is Condition and Cosmetic Repairs, says minor deficiencies that come from deferred maintenance and normal wear don’t block an as-is appraisal, and that cosmetic or minor repairs are not required. It then lists them by hand — missing handrails that do not pose a threat to safety, holes in window screens, cracked window glass, defective interior paint surfaces in housing built after 1978, minor plumbing leaks that cause no damage, and other damaged components the appraiser judges not to be a health or safety issue.
The same section adds a line worth remembering: an element that is functioning well but hasn’t reached the end of its useful life shouldn’t be recommended for replacement because of age.
What that means at the house
Three consequences follow.
The bar is a floor, not a standard of finish. The question is whether the house is safe, secure, sound and sellable — not whether it’s in good shape.
Age alone is not a defect. A nineteen-year-old water heater that works is not a repair item.
The lender decides, not the appraiser. 4000.1 says plainly that regardless of what repairs the appraiser suggests, the mortgagee determines which are required.
Where people get it wrong
The myth is that FHA is the picky loan. It gets repeated in listing remarks and in advice to sellers, and it costs FHA buyers offers on houses that would have appraised fine.
Paint is where most of the confusion lives, because the rule genuinely has three branches:
- Built before 1978 — lead-based paint rules apply, and they are stricter. This is the case the myth is built on.
- Built 1978 or later, exterior — repair is required only where defective paint exposes the surface underneath to the elements. Surfaces meant to be bare, like stained or pressure-treated wood, don’t need paint at all.
- Built 1978 or later, interior — cosmetic. Not required.
“Peeling paint gets flagged” is true in one of those three cases, and people apply it to all three.
A worked example
A 1996 house in Gilbert comes back from the appraisal with a cracked pane in a bedroom window, a missing handrail on three interior steps, a dripping kitchen faucet, and scuffed interior paint throughout.
Under 4000.1, none of those are required repairs — the handrail turns on whether the appraiser judges that particular run a genuine safety threat. What would be required in that same house: an exterior door that won’t lock, an active roof leak, a furnace that doesn’t run.
What to do with this
- If an appraisal comes back with a repair list, ask which requirement each item ties to. Every required repair has to trace to safety, security, soundness, marketability or occupant health — and the final list belongs to the lender, not the appraiser.
- If a listing says “no FHA,” it’s worth asking why. Sometimes there’s a real condition problem. Often it’s this myth, and the house would have been fine.
If you’re looking at a place someone told you won’t pass FHA, send me the listing and the photos — I’ll read it against the handbook and tell you what would actually apply, before you walk away from it.